TY - JOUR
AU - Jovanovic,Boyan
AU - Lach,Saul
TI - Diffusion Lags and Aggregate Fluctuations. New Name: Product Innovation and the Business Cycle.
JF - National Bureau of Economic Research Working Paper Series
VL - No. 4455
PY - 1993
Y2 - September 1993
DO - 10.3386/w4455
UR - http://www.nber.org/papers/w4455
L1 - http://www.nber.org/papers/w4455.pdf
N1 - Author contact info:
Boyan Jovanovic
New York University
Department of Economics
19 W. 4th Street, 6th Floor
New York, NY 10012
Tel: 212/998-8953
Fax: 212/995-4186
E-Mail: Boyan.Jovanovic@nyu.edu
Saul Lach
Department of Economics
Hebrew University
Jerusalem, 91905
ISRAEL
Tel: 972-2-5883253
Fax: 972-2-5816071
E-Mail: saul.lach@huji.ac.il
AB - This paper studies how random product innovations affect the time series properties of aggregates. It posits that recurring inventions of new intermediate goods differ in quality, and that their usage spreads gradually through the economy. It examines how fluctuations in per capita GNP are affected by these features of the innovation process. Micro data from the U.S. show, first, that the dispersion of products' qualities is quite large: Its coefficient of variation is 0.56. More importantly, they also show that the rate of diffusion of new products is relatively slow; Only 4.3% of the potential market size is realized in every year. Because diffusion is so slow, the model explains only low frequency movements in per capita GNP in the G-7 countries.
ER -